Electronic Warfare, Real Cash

CACI International $CACI ( ▼ 0.41% ) is carving out a profitable niche in electronic warfare, an area of defense spending that continues to expand.

The company provides sensors, software, and counter-drone systems to the US military, NATO allies, and other partners.

In its latest quarter, CACI posted revenue growth of 11% and a surge in free cash flow, underscoring its ability to turn rising defense demand into real earnings power.

CACI’s backlog rose 5% year over year to a record $34 billion, equal to roughly four years of revenue. Management says demand now exceeds its ability to process orders.

The company derives about 20% of revenue from electronic warfare, including counter-drone systems. Industry research expects the counter-drone market alone to grow at a 25% annual rate through 2030.

NATO’s commitment to higher defense spending adds another long-term tailwind.

CACI reaffirmed fiscal 2026 guidance calling for about 8% revenue growth, adjusted earnings growth of roughly 22%, and free cash flow of at least $710 million.

At current levels, the stock offers a free cash flow yield near 5%, according to Barron’s.

The recent $2.6 billion acquisition of ARKA Group expands CACI’s space technology capabilities and is expected to be accretive to cash flow by fiscal 2028.

In a sector crowded with hype, CACI’s electronic execution could be a real advantage.